I mention that because I remember reading during the pandemic that institutional investors generally make shittier landlords: they're quicker to evict, quicker to raise rents, less likely to work with a tenant on a payment plan, and they have fewer ties to the community. There was a concern that with all the eviction moratoriums during the pandemic that large landlords could wait it out, while smaller landlords got screwed and got out altogether in some cases, leaving their housing stock to be gobbled up by the shittier institutional landlords.
Always gets me is the ideological contortions people will get up to in order to not face that California is short a couple million units of housing. Really the US has been investing in looting schemes and not in build out for the last 40 years.
On the other hand, during the upswing in prices, house flipping in California was really popular with investors because the (then) low interest and likely capital gain made things easy.
The headline is true and relevant if you are wondering how investors influence housing prices - with a 20% share, clearly investors influence prices a lot. Moreover, California is where the housing bubble began but it's quite logical it's no longer where the bubble is concentrated so again 20% doesn't imply investor ownership is unimportant.
To understand the meaning of this, consider that supply/demand curves are naturally non-linear and even 5% increase in demand can double the prices.
Nothing else ("% of housing owned by investors"?) is even close.
edit: Yes, obviously I included a time lag (3 years).
[1] https://constructioncoverage.com/research/cities-investing-m...
[2] eg, https://www.zillow.com/home-values/10221/austin-tx/#/
I'd like to see zoning opened back up for increasing density wherever it's needed, but I would also like to see a strong social housing policy.
Or maybe I am misunderstanding what "issue" you're referring to?
Regulations block new supply. If this cannot be overcome, why not add another regulation that private equity cannot own houses? There's no reason they should not be subject to CAs extensive regulations too.
Homeowners here would just love to spend a year workshopping regulations to prevent investors from buying homes. They know that those regulations would do nothing at all to address the scarcity that drives their home prices, and wouldn't result in them having to adapt to large numbers of new neighbors.
It's the exact same reason they obsess over inclusionary zoning ordinances (IZOs). Affordability is so important! That's why we need new, toothier regulations to ensure that no new housing projects here can ever pencil out for the developers.
PE is a complete sideshow. The root cause of the housing crisis is exclusionary zoning.
On what land? With what planning permits?
Build more housing, and "predatory" landlords will have more competition. The endless restrictions on residential construction are the root cause, not your envy of wealthy individuals.
Side point: There are many people who are in no position to own a home or have one built for them. Where do they live if there aren't any landlords?
"Most of California’s single-family house investors are “mom and pop” types, according to BatchData.
Small-fry owners, with up to five properties nationwide, control 91% of California investment houses.
The rest is divvied up this way: Owners of six to 10 houses control 4% of California investment houses. Investors with 11 to 50 houses own 3% of this Golden State housing group. And 51 or more? Only 2% of investment houses."
From the article:
> By this math, 19% of California houses were owned by investors, ranking No. 36 among the states and just below the 20% national norm. By county, tiny Sierra has the most (83%) and Ventura the least (14%).
This might undercount (if owners don't file the form) or overcount (tax fraud or error), but there's financial incentives to get it right on both sides, so it's probably fairly accurate.
The link to the original source is paywalled.
Simply looking for properties owned by corporations will get you really close.
> 19% of California houses were owned by investors, ranking No. 36 among the states and just below the 20% national norm.
States with the highest share of investor-owned houses:
> Hawaii at 40%, Alaska at 35%, Vermont at 31%, West Virginia at 30%, and Wyoming at 30%.
States with the lowest are all in the Mid-Atlantic and lower New England:
> Connecticut at 10%, Rhode Island and Massachusetts at 12%, and Delaware at 13%.
Why so low in California (again, I'm baffled that this is "low")?
> the sky-high price tag for single-family homes, the third-highest nationally at $866,100
> Most of California’s single-family house investors are “mom and pop” types, according to BatchData.
> Small-fry owners, with up to five properties nationwide, control 91% of California investment houses.
> The rest is divvied up this way: Owners of six to 10 houses control 4% of California investment houses. Investors with 11 to 50 houses own 3% of this Golden State housing group. And 51 or more? Only 2% of investment houses.
I’ve owned the house long enough that I’ve had several tenants churn out when they buy their own houses.
This doesn’t feel like a policy failure, IMO. Renters have the option to live in a free standing home while they save for a down payment, and “investors” have an incentive to increase density/add to the housing stock.
Not everyone is at a point in their life where it makes sense to own a home. It feels weird making a judgement that these people should be required to live in apartments.
California incentivizes holding onto real estate with prop 13, which caps property tax increases to 2% per year for the entire time you or your beneficiaries own it. There are people paying less than $10k per year property tax on $3M+ properties, and they can rent for $7k+ per month.
Look at it in a historic or idealized context.
Personally I would say that is is a lot, and also too much - people tend to be less indifferent about things they own.
Maybe stable white color employing businesses mixed with a constant out migration of younger people, more likely to be renters, to the coasts?
A majority of people own real estate, so they're happy with the status quo. Why would you put up with even the slightest personal inconvenience from added housing, if all it got you was a reduced value of your property?
The real issue with CA real estate is prop 13. It directly disincentivizes selling your home as you would be paying significantly higher taxes on the same house (same value etc) somewhere else.
So if you do own a home, you’re much better off keeping it and renting it out rather than putting it on the market. The only thing stopping one from doing that is needing the home value itself as the down payment for their next residence. But even that can be avoided by getting a line of credit on your original house.
If you want to fix CA real estate, scrap prop 13, force granny to sell and move to the boonies (to avoid the massively ratcheted property tax she will now be paying), and you’ll have a massive supply of homes for sale.
Prop 13 massively distorts the market and creates large disparities in what two neighbors may be paying. It essentially ensures that you cannot live where you were born, breaking up families and hurting communities.
It's clearly interesting to speculate the ideal solution on the Internet, but after having been here 10+ years I worry that it's just never going to get better.
I wouldn’t even be interested in a house. Just give affordable cookie cutter apartments in a 50-floor building somewhere.
I don't want to be forced out of my home because the neighbors paid too much for theirs raising my "property value" and tax assessment.
Sounds callous.
I would focus first on banning the use of homes as investment and permitting mixed-use, medium- to high- density construction (with something like 15 min city as a point of reference) before we reach for the big hammer and start coercing the poors out of their homes.
California has a massive housing problem, which is just not building enough houses. Doesn't matter much to me who owns them.
This indicates some broken market dynamics to me. Entities with more capital are having property sit unoccupied, decaying slowly, paying property taxes, because they are betting their self-interested reward for doing so outweighs the risk.
I realize this doesn’t generalize to the entire housing stock, but it sure seems vulgar to me.
If your houses value is increasing but rent is capped, the landlord business isn't going to look very rosy. No new rentals will be built. Of course, I could be wrong.
Interested in counter arguments
I don't think any middle aged person is looking for any communal living type experience.
Also, what do you mean by "short term"? Usually it only makes economic sense to buy a house if you plan on staying there for 5+ years otherwise closing costs and realtor fees eat away any savings you made from not renting. The period of our life where we are the most mobile and willing to change cities due to job changes (20-40yrs) is also the period in our life when people start families and have children.
I think most people prefer houses
Various stats put the ratio of owner-occupied residences to renter-occupied residences at roughly 70% to 30% (https://www.apartmentlist.com/research/rent-statistics)
Since only 40% of those "owner"-occupied homes have their mortgages paid off, that means the bank owns the other 60%.
Doing the math, this means only about 28% of people actually own the place in which they live. The other 72% is owned by banks, investors, landlords, etc.
That fully 20% of homes in California - intended to be owned by families or individuals as their primary residence - are instead served out as rentals, and this is a low percentage compared to other states, is a massive indicator of the one the key issues facing Americans:
We don't own anything. Not even our own homes. Not even our lives, which we sell to others at a discount as "labor".
When we don't own anything, we have no stability. When we have no stability, we live in a constant state of uncertainty, which is just another word for "fear". Fear makes us act desperately or angrily or selfishly.
And the people who run everything use that fear to manipulate us into agreeing to be exploited by them - to work for them, vote for them, worship with/for/on them, etc.
If you actually want peace and freedom and liberty and all those things Americans claim to care about, we need to start by building stability in our lives.
That starts by taking back ownership of those things that belong to us through our efforts. The mortgage companies provide zero value to homeowners - they simply gate who gets to live in a home vs. who must pay for a rental, which is even more unstable.
Replace hierarchies with cooperatives. Stop using money as the exclusive determining factor of whether someone is housed, fed, clothed, or cared for.
Desperate people make lousy workers - ask any power and money pervert who believes in this system how hard it is to find good indentured servants who will just obey without complaining.
Stable, cared for people make excellent workers - fear may be a motivator, but gratitude is an even greater motivator. When people are stable and able to relax, they are more often willing to contribute toward keeping that stability. You see this when people who have "free" time spend it volunteering for their community.
If that stability comes at the expense of others, however, it's inherently unethical and leads us back exactly to the situation where we are now - where some people gain stability by manipulating others into working for them and stealing from them a significant portion of the value they create.
